Royal Bank of Scotland posted record losses for year ending 2008 in UK corporate history , accumulating to £24.1bn ($34 Billion).
RBS said that its 2008 loss totalled £24.1bn ($34.2bn), which is the biggest annual loss in the UK corporate history. It also said it would put £325bn of toxic assets into a scheme that offers insurance for any further losses.This is a much larger amount than had been expected, and given that these assets are so difficult to value it is not clear whether the British government will in the long run make or lose money on the deal.
RBS Pakistan has declared that its operations are up for sale as well after the RBS posted the biggest loss in the corporate histoty of UK. The RBS exit comes at a time when it was in the process of reorganising the business of ABN AMRO, which it bought at peak of the global financial crisis in 2007.
Report in the the news about this developments;
Friday, February 27, 2009
By Saad HasanKARACHI: As the Royal Bank of Scotland (RBS) on Thursday announced the worst financial loss in British history its office here disclosed the operations in Pakistan are being sold.In a statement released to the Karachi Stock Exchange (KSE), the bank said there are potential buyers who have expressed interest in its business, which includes the retail and commercial banking segments.
“Current capital constraints on the RBS Group and the need for RBS to reduce the size of its balance sheet means it is unable to provide the investment the business in Pakistan requires to achieve its growth potential,†it said. The bank neither divulged any details pertaining to potential buyers nor did it say anything about the fate of its employees here.
There were doubts when it started re-branding the 80 branches of ABN AMRO in Pakistan amid deteriorating economic and political situation, industry people say. “It is only logical for RBS to give up operations in Pakistan,†said an official of another multinational bank. “They came because this country was part of the deal. RBS decision is caused by global reasons but the situation here will make head office of any multinational bank sceptical.â€
Economic decline will further pull down profit growth of the banking industry this year and next, as people borrow and deposit less in banks, a banking analyst said. “Banks are parking their funds in treasury bills as they fear rise in non-performing loans and cut back on lending,†said Farhan Rizvi, an analyst with JS Research. “Industry is in a consolidation phase and there will be mergers and takeovers this year.†But, he said, it is unlikely that a new foreign bank will come forward to buy RBS in Pakistan at a time when there is financial turmoil in international markets.
And, he said any consortium formed locally to take over RBS would have to be very strong financially. “We are talking about 80-plus branches and over Rs112 billion in assets.†The chances of RBS being purchased by any foreign bank, which is already operating in Pakistan, are also slim, said A B. Shahid, a banker and commentator.
“With the prevailing political instability and security concerns, it is very unlikely,†he said. “It is unfortunate the turmoil continues and our politicians aren’t able to see the severity of the situation.†While their role as financial intermediaries is limited, industry people say, foreign banks have brought modern banking practices and products to Pakistan.
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{ 5 comments… read them below or add one }
Can’t we conclude that Pakistani Banks are better manager of money compared to their foreign peers
something to cheer about. Or may be we can call it blessing in disguise as our local banking industry has not matured enough to expose itself to sub-prime lending or other modern forms of securitized lending stuff.
Or you can say that since our people still follow Islam to certain extent, the credit lines are not that deep as compared to other countries. Anyways, its a matter of great relief to everyone.
RBS is a nice bank but it has just started operation in pakistan and it will take time to establish.
The Royal Bank of Scotland had losses of 24Billion UK pounds and Fred Goodwin still gets 650k pension every year. That is just unbelievable! They should strip him of his pension.
Which Bank is going to buy RBS?